New Credit Card while in Chapter 13

[Flamingo]

Actually if you apply within the same period , for the same type of credit (revolving,auto,home) it is scored same as 1 inquiry.

Only for mortgage applications or vehicle applications (window of approximately two weeks)...not credit cards.

[papie]

You could easily be approved for a secured credit card. Of course, you'll have to send in the deposit, but it would still show up on your credit report as a credit card. Be aware that there is a vast difference between "secured" credit cards and "prepaid." You need to make sure it specifically states "secured."

I hate to be the bearer of bad news, but each "hard" pull made in regards to a credit card application counts as one. That two week rule only applies to home and auto loans.

I'm kind of laughing at the fact that you think youre credit is going to be "re-established" the day after your 13 is done. The day after your 13 is done is the FIRST day your credit will start to re-establish itself.

Good luck!

[jetsfan2010]

Good luck to you. I was told by my attorney unless its an emergency to not incur any new debt via credit, however since filing I have received offers from Orchard, Credit One and First Premier multiple times.

[ABC]

Sorry for the rant, but I just don't agree with obtaining credit while in an active 13 for any reason.

Even to avoid a calculated $ 2100 payment increase just after bk discharge ?

[Flamingo]

Let me add since you're so inquisitive...

I have an adjustable rate mortgage with a large adjustment coming right around the time I plan to wrap up this CH13. I plan to refinance into an FHA loan the day after it's done. However, I will need to have re-established credit (24 months is ideal) to do this.

This is called pre-planning. I hardly feel like a $500 or $1000 card would somehow lead to the previous spiral that $ 25000 or $ 35000 card approvals over the phone did. I am not late on anything else, paying ahead, using cash saved at home , etc.

We refinanced DURING our Chapter 13 (FHA) and we did not have to have re-established credit going back for any period of time. What mattered was that all plan payments were made on time. We refinanced to buy out of our 13 (could do so under the Old BK law) and replace a roof that would not have made it to the end of our five year Chapter 13. Pre-planning will not help you during a Chapter 13 for what you want to do - what you need to do is to make sure all your Plan payments are paid in full on time and that all other bills (utilities, mortgage, etc.) are paid on time and not late. That will help you the most since you plan on refinancing right out of your 13. You will not or may not be able to get any sort of credit during your 13 to help you out at all so don't bank on it plus the Chapter 13 will work against you with most creditors until you are well past your discharge.

[ChescoChris]

Hey ABC;

I feel the same way; the sooner I can start rebuilding a decent credit history the better. Plus, I travel for work and trying to rent cars gets tricky without a credit card. Home Depot won't even rent a $250 tool without a credit card -- no debit cards. Anyway, I applied for the Public Savings Bank Open Sky Secured Visa... I haven't gotten the card yet but it is not a bad deal and reports to all three bureaus.

Oddly, my lawyer said a small credit card would not be a problem and the trustee said nothing at all about new debt. Good luck!

[helpmeout]

Let me add since you're so inquisitive...

I have an adjustable rate mortgage with a large adjustment coming right around the time I plan to wrap up this CH13. I plan to refinance into an FHA loan the day after it's done. However, I will need to have re-established credit (24 months is ideal) to do this.

This is called pre-planning. I hardly feel like a $500 or $1000 card would somehow lead to the previous spiral that $ 25000 or $ 35000 card approvals over the phone did. I am not late on anything else, paying ahead, using cash saved at home , etc.

It's my understanding that the FHA won't even consider a loan until 2-3 years AFTER a BK discharge and you haven't been discharged yet. You may want to look into that, especially if you reaffirmed your mortgage.

[NowImDownInIt]

It's my understanding that the FHA won't even consider a loan until 2-3 years AFTER a BK discharge and you haven't been discharged yet. You may want to look into that, especially if you reaffirmed your mortgage.

You are quite mistaken. You can attain an FHA secured mortgage after one year in a Chapter 13 with a good payment record. The key is the chapter 13. In December, I was approved for $150k mortgage (which is a good amount for my area of Texas).

[mylife]

Nowimdowninit, congratulations on getting the mortgage, that's good information. Do you remember what the qualifications were? The only thing I was hopeful for was a modification that we did not qualify for before because we supposedly made too much money.

[Kuya]

From my personal experience:

WAMU, granted me my first "TWO" CC's one year into chapter 13 at 12% . . . Chase bought them out and kept my cards open still. But certainly Chase will not approve new apps.

Orchard Bank approved $300 limit 16% interest - not that bad
HSBC Discover card approved $300 limit 17%
JCP - approved $200 23%
FingerHut -approved $200, increase to $400, increase to $700, increased to $900
CreditOne - approved $1,000 23%
Credit Union - secured loan of $4,000 (secured, so it's just a money play to build credit)

Now, before you jump all over me . . My attorney gave the ok, as well as my Trustee - but not to go over $1,000 debt between any/all. So, what I did was to use each one for small things, one at a time. Pay it off. Rotating the cards for the last 3 years of my BK13. Because YES, it was my goal too to come out of this . . . as rebuilt as possible . . .

Two years into my BK13, my credit score was tanked at 535. Now, as I close out my BK . . I walk out on day1 with 675. I am pretty happy about that. I also have credit scores history of 3 years AFTER filing and that . . helped me get pre approved for auto loan at 0% - 9%, depending on bank and year and amount . . .

So, yes . . I feel your pain and I agree that if used wisely and NOT considered as "spendable" . . you can begin the re-healing process during the bk. However, if you are an alcoholic . . don't go sit at the bar! Not even to listen to the music.

Ta da!

PS - not everyone who IS an alcoholic KNOWS they are an alcoholic . . . . be careful

[catleg]

I don't see how adding a low limit visa/mc is going to "build credit". (i.e. assuming you pay rip off fees for an Orchard card).
Your prior good accounts will remain on your credit report for 10 years.
Also if you are paying a mortgage or car payment during BK.
Your main concern should be cleaning up any messes on your credit reports, and let time heal old wounds.
File disputes through Trans Union, the other two are a waste of time, always comes back verified even when totally wrong.
P.S. My score thru credit karma.com is approx 610. The problem is the bad pay history and judgments just 2 years ago.
At the bottom i.e. when I financed a car at ~15% it was 535 with no lates and no judgments.

[Exployer1234]

Even to avoid a calculated $ 2100 payment increase just after bk discharge ?

I would speak with someone about receiving the FHA without having to establish new credit. You FICO score will go up after your BK is discharged, even without new credit. Mine was around 500-520 and after I received my discharge i was around 620. I did not establish any new credit.
Just look at all your options before you decide to start to establish new credit while in a BK. There is a reason why we all have to go through a BK and each one of us have to choose what the right path is.

[ABC]

It's my understanding that the FHA won't even consider a loan until 2-3 years AFTER a BK discharge and you haven't been discharged yet. You may want to look into that, especially if you reaffirmed your mortgage.

2 years if for CH 7. You can actually refi a CH 13 after 12 payments, which is not my plan.
I am referring to refi post discharge and I KNOW that re-established credit would be required then.

[NowImDownInIt]

Nowimdowninit, congratulations on getting the mortgage, that's good information. Do you remember what the qualifications were? The only thing I was hopeful for was a modification that we did not qualify for before because we supposedly made too much money.

I did not actually take the mortgage I was approved for. I decided to wait because I really want to do it right this time. I want to keep my mortgage below 25% of my take-home pay and if I wait until discharge that will go up substantially, however:

Qualifications were:
3.5% down
150k or under
4.0% fixed interest rate for 15 years or 5.0% for 30 years.

My credit was in the tank when I entered my bankruptcy in '08. I wouldn't have qualified for a $200 limit First Premier credit card, but my scores are all between 630 and 655 now. My husband and I have a take home at this point of around $60k.

I think that it's a bad idea to try to start rebuilding credit while in BK because it makes it more difficult to learn the lesson involved and God forbid you get laid off or something. Time heals most credit wounds. I am learning this first hand. I never thought it would happen.

I also qualified for a vehicle last July when we thought my car was totaled. Was approved for up to $25k with 20% down and a 6% interest rate. This was with my credit union and I did not go through with it because my insurance covered replacing my engine.

I would like to add that this is just my personal opinion.

[helpme2010]

Anyone have success obtaining one ? I tried BestBuy online , but was a no go.
I don't want to apply at companies that aren't doing this.


(Please save all the "why" and "ask your attorney" comments. I want to rebuild credit and I got a prior blessing.)

Open a new checking account and get the debit card instead. All you need is enough money in the account to pay your bills and of course use your debit card. I recently did this and I am post ch 7 and current chapter 13 and they gave it to me no questions asked. Why borrow again, instead you will only use what you have in your account to support your spending habits.